ST. PAUL TRAVELERS SETTLES BID-RIGGING PROBE
Agreement is Part of Ongoing Effort to Restore Competition in Insurance Industry

Attorney General Eliot Spitzer and State Insurance Department
Superintendent Howard Mills today announced an agreement
with one of the countrys largest property casualty insurance companies to resolve
charges of customer steering, bid-rigging and improper finite reinsurance transactions.

Connecticut Attorney General Richard Blumenthal and Illinois Attorney
General Lisa Madigan also joined in today's settlement.

Under the agreement, St. Paul Travelers, a major provider of automobile
and homeowners insurance for individuals and commercial insurance for small businesses,
will pay $77 million in restitution and penalties and adopt a series of reforms. In
addition, St. Paul Travelers has issued an apology acknowledging its improper conduct.

"St. Paul Travelers has joined the growing number of insurers,
brokers and agents who have pledged to make the market for insurance coverage more
transparent and competitive, Spitzer said. This development will benefit all
consumers, from individuals buying car insurance to small businesses to large
corporations."

State Insurance Superintendent Howard Mills said: "St. Paul
Travelers is now reforming its business so that consumers are given access to more
information about their insurance transactions while at the same time compensating
policyholders who were economically harmed by their past conduct. Both initiatives are
welcome news for all those involved in the property casualty insurance market."

As described in the Assurance of Discontinuance settling this case, the
investigation found that St. Paul Travelers made undisclosed payments to insurance brokers
and agents in exchange for business referrals, and participated in a scheme to fix
insurance prices in the excess casualty area.

For example, the assurance cites an e-mail from a broker at Marsh &
McLennan Companies to a St. Paul underwriter seeking a phony bid for an insurance contract
that was being steered to one of St. Paul s competitors, Zurich:

"Specs were forwarded in November for [Client C]. Zurichs
renewal quote is $175,000 for [the lead excess layer]. Primary AL is $2MM. Josh is asking
for non-quotes. If you didnt already respond to [the Marsh executive] . . ., please
feel free either to decline for class or quote higher (please)."

The next day St. Paul responded by issuing a quote 30 percent higher
than Zurichs bid.

The assurance also details St. Pauls use of improper "finite
reinsurance" to bolster both its own financial results and those of its clients. For
example, in the years 1999 through 2002, St. Paul entered into aggregate excess of loss
reinsurance contracts with an insurer in Barbados, despite a side agreement that any
losses suffered by the insurer would be made up by St. Paul.

In a statement today, St. Paul Travelers apologized for its actions,
saying: St. Paul Travelers acknowledges that certain of its employees violated
acceptable business practices and St. Paul Travelers own standards of conduct by
engaging in improper bidding practices and certain finite insurance
activities. St. Paul Travelers apologizes and has enacted business practice reforms to
ensure that these incidents do not occur again. Further, St. Paul Travelers has agreed to
support legislation eliminating contingent compensation for brokers and agents.

Under today's agreement, $37 million will be paid to St. Paul Travelers
policyholders harmed by the companys bid-rigging activities. In addition, St. Paul
Travelers will pay penalties of $24 million to New York and $8 million each to Connecticut
and Illinois.

In the fall of 2004, the New York Attorney General's office and the New
York Insurance Department announced a joint probe of misconduct in the insurance industry.
This investigation has resulted to date in guilty pleas from 20 insurance company
executives and officers, and the recovery of approximately $3 billion for consumers and
workers compensation plans.

The investigation underlying today's Assurance of Discontinuance was
conducted by Assistant Attorneys General Maria Filipakis, Matthew Gaul, and Mel Goldberg
under the direction of David D. Brown IV, Chief of the Attorney Generals Investment
Protection Bureau.

Susan Donnellan, a Deputy Superintendent and General Counsel of the New
York State Department of Insurance, led the Insurance Departments investigation.